Tracking Changes in Higher Education Politics

Until recently, it hasn’t been entirely clear where the Trump administration stood on higher education, or whether higher education policy would be a priority for the Department of Education (ED), now led by Education Secretary Betsy DeVos, a school choice advocate who appears to be turning her focus to K-12 education.

The Trump administration – and ED in particular – has gotten off to a slow start, some higher education experts say, with many staff positions still unfilled and political gridlock on Capitol Hill preventing Congress from moving forward with more acute legislative endeavors.

“The unpredictable and chaotic decisionmaking that all of you are seeing is worse than it looks,” said Terry Hartle, senior vice president for government and public affairs at the American Council on Education, during the Education Writers Association national seminar last week. “Higher education is just not a priority for this administration.”

But if the Trump administration’s fiscal year 2018 budget proposal is any indication, there may be a shifting landscape in higher education policy. The budget plan proposes to significantly cut from – or in some cases entirely eliminate – several higher education and student aid programs. It also puts forth several big changes to the federal student loan program.

“That’s a big signal about what they want to do and where they want to do it,” said Jason Delisle, a resident fellow at the American Enterprise Institute (AEI).

Although the proposals put forth in the Trump administration’s budget plan likely won’t come to fruition in the budgeting and appropriations process, it’s possible some ideas could be picked up by lawmakers as Congress works toward reauthorizing the Higher Education Act, which has been overdue for an update since the end of 2013 (although Congress extended the current version through 2015).

One area the administration clearly wants to work on is the federal student loan program. Within the budget proposal, the administration proposes eliminating the in-school interest subsidy for federal Direct loans, and consolidating all income-driven repayment plans into one new plan. Under the new repayment plan, borrowers would repay their loans over 15 years (or 30 years for graduate loans), and with a discretionary income cap of 12.5 percent.

NASFAA members can find more information on the proposed IDR plan in this POLITICO DataPoint infographic.

Hartle said attempting to eliminate the interest subsidy would likely be controversial, and that doing so would make borrowing more expensive for students.

But Delisle challenged Hartle’s argument that the proposed budget would make student loans more expensive. Shortening the repayment period, he suggested, would balance out the increase in loan balance from eliminating the interest subsidy. The changes to loan repayment, he said, would create a “huge benefit” to undergraduate borrowers.

Another way the Trump administration could seek to make its mark on higher education is through re-opening negotiated rulemaking sessions for some Obama-era regulations, according to Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities (AASCU).

Nassirian told reporters in the room that he’s heard ED might look to rewrite borrower defense and gainful employment regulations. POLITICO PRO’s Morning Education newsletter also recently reported that the administration may delay the regulations past July 1 to allow for more time to open new negotiated rulemaking sessions for them. The administration has yet to publish a rulemaking agenda.

But the changing political attitudes toward higher education aren’t just coming from the White House. Hartle, Nassirian, and Delisle said it will be important to look to actions in Congress and at the state level. If federal funding for Medicaid decreases, for example, states might step up to cover the difference, Hartle said. Doing so could put a strain on state funding for education. And if Congress pursues tax reform, it could be a larger threat to colleges and universities than tax cuts, Hartle said. If Congress targets higher education tax credits or deductions in a tax reform bill, for example, it could affect students and families, while changes to charitable contributions could hurt public institutions already squeezed financially from state budget cuts.

However, Delisle challenged the idea that state funding cuts result in tuition increases at public universities, saying the same standard of evidence many use for the Bennett Hypothesis (that increases in student aid can lead to increases in tuition) should be applied to the state funding narrative.

“This type of analysis does not explain how much of the funding cut caused the increase in tuition any more than the same approach would explain the effect of student aid increases under the Bennett Hypothesis,” Delisle wrote in a paper released last week. “Rather, it assumes that a causal relationship already exists, that it is dollar-for-dollar, and that no other factor could explain the changes in tuition.”

If in some years tuition increased when there was also an increase in state funding for public higher education, it gives less credence to the theory, Delisle argued. In the paper, Delisle dives into debunking the theory further, referencing studies that have shown state appropriations have relatively small effects on tuition.

“... [T]he available research suggests that if state lawmakers increased appropriations for public colleges and universities, it would be unlikely to have an effect as large as advocates assume,” he wrote. “More state funding appears to buy pennies on the dollar in lower tuition. That makes increasing appropriations for public colleges and universities an ineffective — even wasteful — policy for keeping tuition low. It also implies that grant aid might deliver more bang for the buck than larger state appropriations.”

As Congress works toward crafting a budget for 2018 and a HEA reauthorization bill, more details on the changing landscape of higher education politics will continue to emerge.

Publication Date: 6/8/2017

David S |
6/8/2017 1:31:31 PM

I would like Jason Delisle - who has never met a federal aid program he doesn't want to see cut or eliminated - to show me someone who ever claimed that the relationship between decreased state spending and increased tuition is dollar-for-dollar. Not that I've read every single article on the subject, but I've read quite a few, and I've sure never heard anyone present that theory. Straw man argument.

Been nice knowing you, access. You were great.

Diana C |
6/8/2017 8:41:01 AM

Eliminating the subsidized loan does mean that a student ultimately pays more...more interest is accruing. A shorter repayment period means larger payments and, depending upon the job climate, field of study, and life events, could be disastrous for the borrower.

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